Thursday, February 27, 2014

Although the scale of California's conventional hydropower remains much larger than that of solar power, solar's rapid growth provides a meaningful contribution to the grid.

Solar power can work nearly anywhere, but installing it where it's actually sunny much of the time pays big dividends.

After reading a San Jose Mercury article with the unwieldy title, “Drought threatens California’s hydroelectricity supply, but solar makes up the gap” I was intrigued enough to do a little fact-checking on state-level electricity statistics. The article quoted the head of the California Energy Commission, who implied that solar power additions were sufficient to make up for any shortfall in hydro, historically one of the state’s biggest energy sources. My initial skepticism about that claim turned out to be largely unfounded.

Solar has been growing rapidly, especially in California, but even with nearly 3,000 MW of photovoltaic (PV) and solar thermal generation in place, it’s still well short of the scale of California’s 10,000 MW of hydropower dams, especially when you consider that the latter aren’t constrained to operate only in daylight hours. However, I also know better than to respond to a claim like this without checking the data on how much energy these installations actually deliver.

My first look at the Energy Information Administration’s annual generation data seemed to confirm my suspicions. In 2012 California’s hydropower facilities produced 26.8 million megawatt-hours (MWh), while grid-connected solar generated just 1.4 million MWh. However, when I looked at more recent monthly data, the mismatch was much smaller, due to solar’s strong growth in the Golden State. For example, in September 2013 California solar power generated 435 MWh, or nearly 24% of hydro’s 1.8 million MWh.

The potential drought benefits of solar stand out even more sharply when we compare the growth in solar generation to the change in output from hydro. Last year solar electricity in the state increased by 2.4 million MWh, compared to 2012, while hydropower fell by 2.3 million MWh. That added solar power won’t provide grid operators the same flexibility as the lost hydropower, because of its cyclical nature, but it is clearly now growing at a rate and scale that makes it a serious contributor.

I’d be remiss if I didn’t point out that solar in California is still nowhere near the scale of the state’s biggest electricity source, natural gas generation, which in 2013 produced over 100 million MWh, or 57% of the state’s non-imported electricity supply. Gas is also filling much of the roughly 18 million MWh shortfall left by the early retirement of Southern California Edison’s San Onofre Nuclear Generating Station last summer, and if the state’s drought worsens, gas will be the main backup for further declines in hydropower.

Yet solar’s growing contribution to the state’s energy mix provides a clear demonstration that while generous state and federal policies can make installing PV economically attractive nearly anywhere, it’s abundant sunshine like California’s that makes it a useful energy source, especially when drought conditions reduce the output of other, water-dependent energy supplies.

This isn’t the first time a carmaker has put solar panels on the roof of a car, even if we exclude competitions like the Solar Car Challenge and other efforts to test how far or fast one-off solar vehicles designed by engineering students or enthusiasts could travel. However, I believe this is the first time an “OEM” has added solar panels to a production car for the purpose of providing a significant fraction of its motive power.
The biggest hurdles that any attempt to power a car with onboard solar panels must overcome are the low energy density of sunlight at the earth’s surface and the relatively low rate at which current solar panels can convert it into power. A typical EV requires 0.25-0.33 kilowatt-hours (kWh) of energy to travel one mile. 1.5 square meters of solar panel on the roof of a vehicle would receive on average only about 1.6 kWH per day in much of the US, assuming it was stationary and never parked under a roof or tree, and much less in winter. That’s only enough energy to travel 5 or 6 miles, or the equivalent of around 12 ounces of gasoline in a typical hybrid car. It's hard to fight physics.

The clever part of Ford’s solar design is its recognition that the rate of self-charging from the car’s rooftop wouldn’t be sufficient to liberate its owner from the gas pump without help in the form of an “off-vehicle solar concentrator.” This is essentially a glass carport that focuses the sun’s rays on the car’s PV roof and, according to the write-up in MIT’s Technology Review, works with the car’s software to move the car during the course of the day to keep the roof in the brightest area. That maximizes the amount of energy stored in the car’s battery, yielding enough for the daily needs of a fair percentage of drivers.

It’s not immediately obvious that combining two of the most expensive energy technologies of today — EV and PV — represents a good strategy for making them more competitive with the status quo, particularly given the likelihood of relatively stable gasoline prices for the next few years and the significant improvements being made in the fuel economy of conventional cars. 40 mpg highway is no longer considered remarkable. The ordinary hybrid version of the C-MAX is rated at 43 mpg combined city/highway, and the plug-in version on which the solar prototype is based is rated at 100 mpg-equivalent on electricity alone.

I have no idea what Ford would charge for the solar option should it eventually build the car, but it’s a good bet that it would be a significant multiple of the roughly $300 cost of the solar panels. Even without the Fresnel-lens carport, integrating PV into the car’s roof in a durable manner, together with the necessary changes to the car’s power management hardware and software, are unlikely to come cheap. Nor is it obvious that putting solar panels on a car’s roof is the best way to provide renewable electricity for vehicles. As Technology Review notes, Tesla is pursuing high-voltage (i.e., rapid) recharging facilities powered by stationary solar arrays, thus removing the constraint on effective PV area. It would be even simpler for many EV owners who want to avoid “exporting” their automobile emissions to fossil-fuel power plants to sign up for 100% renewable power from their local utility.

It’s no secret that EV sales have been disappointing, initially, for various reasons. 2013 sales figures for the US indicate that EVs, including plug-in hybrids like the non-solar C-MAX Energi, accounted for just under 100,000 new vehicles in 2013, or 0.6% of the US car market, compared to nearly 500,000 hybrids, or just over 3% of total sales of 15.5 million. If the US Congress eventually pursues tax reform along the lines suggested by recently retired Senate Finance Committee chair Max Baucus (D-MT), then the federal EV tax credit of up to $7,500 per car, which has helped push EV sales to current levels, would be in jeopardy. Carmakers should be thinking seriously about the long-term value proposition for EVs on their own merits.

The C-MAX Solar looks like a step in that direction. Once technology-hungry early adopters and the greenest consumers have been satisfied, the mass market will be seeking cars that compete on mainstream measures of convenience, cost and performance. In that light, even a Tesla that can be recharged to half its battery capacity in around 20 minutes via the company’s network of Superchargers falls short, compared to a gasoline car that can be refueled in under 3 minutes. No recharger on earth can deliver energy to a car at the effective rate of a gas pump, without dramatic changes in battery technology.

Yet the C-MAX Solar can do something that no other type of car can: make its own fuel, in a car that can also be refueled conventionally at any gas station, anywhere. That could provide a unique selling point, enhancing the convenience of cars in a totally new way, rather than requiring compromises on convenience as other plug-in EVs do.

I’ve long believed that the transition from fossil fuels to low-emission energy technologies has been hobbled by its dependence on government subsidies and would accelerate when those technologies can outperform on measures of “better, faster, cheaper.” Ford’s solar prototype must still demonstrate that it can become a real production car, rather just than a car show concept. If it does, it could help make EVs attractive to average consumers without requiring thousands of tax dollars in incentives. That could help create the basis for a truly sustainable transition to a new energy economy.

Thursday, February 13, 2014

Early estimates indicate that US oil demand grew by 2% last year, after several years of declining consumption.

Although superficially consistent with recent GDP data, it's not yet clear whether this reflects a new trend or the results of non-recurring factors.

After three straight years of declining oil consumption and a substantial net reduction since 2005, preliminary estimates suggest that US demand for petroleum and its products grew by 2% last year. In the estimation of the International Energy Agency (IEA) US demand growth in 2013 even outstripped that of China. However, it strikes me as an exaggeration--or at least premature--to see signs, as a recent headline in the Financial Times suggested, that "America returns to gas-guzzling oil demand." Is this a new trend, or just another blip?

The Energy Information Agency (EIA) of the US Department of Energy won't issue final figures on 2013 consumption for a few more weeks. In the interim, the American Petroleum Institute (API) released its estimates for December and the Fourth Quarter, showing a 5.8% year-on-year uptick for the month and a 4.6% increase for the quarter, compared to the final quarter of 2012. API's Chief Economist John Felmy cited "continued progress in domestic manufacturing as well as the broader economy."

In any case, the linkage between economic growth and oil demand has weakened over time, falling by more than 60% since the mid-1970s and by 20% just since 2000. In fact, following the peak in US oil demand in 2005, estimated oil and natural gas consumption per dollar of real GDP has declined by an average of 1.7% per year, only a little less than the average of post-recession US GDP growth. So annual efficiency gains come close to offsetting the impact of economic growth on US oil demand.

Some of this is the result of specific efficiency improvements, such as the 1.0 mile-per-gallon increase in the fuel economy of vehicles sold in 2013, compared to the previous year. Tracking data from the University of Michigan indicate a 16% improvement in the fuel economy of new cars since the 2008 model year. Of course it takes time for the impact of new higher-mpg vehicles to make a dent in the demand of a fleet of roughly 235 million cars and light trucks. That's even true of plug-in electric vehicles that use no liquid fuel at all. With cumulative US sales of around 160,000, EVs are displacing less than 5,000 barrels per day (bpd) of gasoline at this point, in a 9 million bpd market.

Because the primary use of oil in the US is in transportation, with less than 1% of it going to generate electricity, we should look at indicators of transportation activity for signals about changes in oil demand. The Federal Highway Administration's tally of US vehicle miles traveled (VMT) for 2013 was just 0.6% higher than 2012, through November, and remained more than 2% below its 2007 peak, only slightly more than a decade ago. If there's been a recent shift in driving habits, it's either well-hidden or involves a switch back to putting more miles on less-efficient vehicles--countering the anecdotal trend of the last few years. In the longer term, VMT growth will face headwinds from the changes in driver demographics I described last August.

In seeking explanations for last year's higher demand, we also can't ignore one-time factors like weather. Heating-degree-day data for the northeast during the fourth quarter shows a nearly 10% increase compared to 4Q2012. That indicates more days when the average temperature was farther below 65 F, and presumably more consumption of heating fuel as a result--a trend that seems to be continuing this quarter.

Scrutinizing EIA's detailed data on product supplied reveals that around two-thirds of the roughly 300,000 bpd annual increase in demand in 2013 (through October) was in the categories of liquefied petroleum gases (LPG) and low-sulfur distillate, both used for heating. For that matter, much of the growth in LPG demand is being met from the processing of shale gas, rather than crude oil refining, so its inclusion as part of "oil demand" is somewhat misleading. Nor do growing US net exports of refined products, at around a million barrels per day last year according to API, have any bearing on this discussion, since they aren't included in the figures on which US consumption is gauged.

Another factor to consider when evaluating changes in oil demand is pricing. US retail gasoline prices averaged $0.11 per gallon less in 2013 than 2012, while retail diesel averaged around $0.05/gal. less. Those don't seem like big enough changes to affect demand, but the fourth quarter comparison is more dramatic, with gasoline and diesel $0.22 and $0.15/gal., respectively, less than a year earlier. That, together with a cooler fall, might help explain the fourth quarter bump in API's figures, which showed gasoline demand up by 3.7% year-on-year, and diesel up 5.3%.

Indications of a resurgence in US oil demand growth depend heavily on a single quarter's results, following a quarter of above-trend GDP growth--partially offset by efficiency gains that are expected to grow--and reinforced by cooler weather. While I can easily imagine that a return to robust US economic growth, combined with persistently weaker fuel prices, could put US oil consumption on an ascending path again, I'd like to see a few more data points before discerning larger implications for global oil demand and prices.

A different version of this posting was previously published on the website of Pacific Energy Development Corporation.

Wednesday, February 05, 2014

Earlier today, I participated in a webchat hosted by The Energy Collective on the subject of the emissions and market impact of the Keystone XL Pipeline (KXL). It was prompted by last week's release of the State Department's "Final Supplemental Environmental Impact Statement" (SEIS) on the project. I encourage you to view the Youtube video of the event, but I thought I should also share some of what I learned in the course of preparing for the webchat, along with a few thoughts there wasn't time to discuss online.

The full SEIS runs around 2,000 pages. I focused on the 38-page Executive Summary and referred to the relevant sections of the longer document when I needed more detail. In particular, I wanted to understand how the authors of the report had assessed the project's impact on greenhouse gas emissions (GHGs), including how they went about trying to gauge how the market would behave with and without the controversial northern leg of the pipeline, linking the Alberta oil sands developments to the main US oil storage and trading hub in Cushing, OK. (The southern segment of the pipeline, from Cushing to the Gulf Coast, is already in operation, because it didn't require a permit to cross an international border.)

President Obama's stated criterion--I still believe he will make the final call--is
ensuring the project does not "significantly exacerbate the climate problem." In terms of emissions, the SEIS analysis
shows a range of incremental lifecycle GHG impact of 1.3-27.4 million tons of CO2 equivalent per year. For a
project this size, that falls below what I'd consider a reasonable threshold for "significantly". It's equivalent to 0.02-0.4% of total US
emissions. On the low end that's on par with US emissions from making glass--not generally considered an important emitter.Yet even if you don't accept State's conclusion that at expected oil prices over the next few decades the oil that would be carried by KXL would be produced with or without the pipeline, the total direct emissions of 147-168 million tons/yr would still only constitute 0.3% of global emissions of around
50 billion tons. As Jesse Jenkins of the Energy Collective pointed out in the webchat, the emissions of any project would look small compared to global emissions. That's precisely the point, when opponents have characterized them as "game over" for the world's climate.The key to the conclusions in the SEIS is that these barrels will find a market somewhere,
and in the process they will back out some other crude oil. As a result, they would have a minimal impact on the global oil price, and so would be unlikely
to increase demand, which is what determines how much oil is refined globally. It's also the case that the alternative crude oils the incremental oil sands production would displace aren't
much lower in lifecycle emissions, e.g., heavy Venezuelan or Middle East crudes. Meanwhile, the report indicates that alternative dispositions would involve
either longer or more energy-intensive transportation, including
rail and/or tanker, entailing around a million tons per year in higher emissions, along with more spillage than expected from KXL. On that basis, it's hard to read this report as anything other than an endorsement of the view that the pipeline would have a minimal net impact, relative to the likely outcomes that would follow if it is not built.

One of the main points we didn't have much time to discuss in the webchat concerned the role of the SEIS in the decision that the administration must eventually make about the project's permit. I thought the most insightful recent comment on this came from President Obama's first Secretary of Energy, Dr. Steven Chu. He sees Keystone as a mainly a political choice. I agree. However, I wonder if the political considerations have started to shift.

Until recently, it seemed that the balance of political costs and benefits favored continuing to delay the decision as long as possible, by whatever means came to hand. That was certainly the case in 2012, with the White House at stake. An approval then might have pleased independent voters, but it would also have deterred an important segment of the President's political base. This year, with control of the US Senate--and thus the administration's agenda in its final two years--potentially up for grabs, the costs might be rising. At least four Democratic Senators in states that voted for Governor Romney in 2012 (Alaska, Arkansas, Louisiana and North Carolina) have made recent statements in support of the permit for KXL. An October surprise on Keystone might come too late to help them.

Nothing in the Supplemental Environmental Impact Report altered my previous view that President Obama should approve the permit for KXL. Yet because it was written after the Lac-Megantic rail disaster, I thought its figures on the potential for more rail accidents and fatalities if the pipeline isn't built added a compelling argument. Oil by rail is a new reality of the North American energy economy; KXL won't change that fact, one way or the other. However, the addition of up to 1,000 more rail cars of crude oil per day, passing through many more communities than the pipeline would, is a sobering reality to weigh against opposition that I heard another participant in today's webchat suggest was at least partly symbolic.